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TMI Blog1972 (12) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of sales tax under the Act. The Appellate Assistant Commissioner, Commercial Taxes, and the Sales Tax Appellate Tribunal confirmed the assessment. The question for consideration in these cases is whether the transaction envisaged by the contract entered into by the petitioners with the Project Administration for manufacture and supply of "second class common burnt clay building bricks" to the Project Administration in terms of the contract in question is a sale or a works contract. The Project Administration called for tenders for the manufacture and supply of bricks at the project site. The petitioners submitted tenders and the same were accepted. An agreement was entered into between the petitioners and the Project Administration on 10th April, 1963. As per that agreement, the petitioners manufactured standard bricks by taking clay from the project land, moulded the clay into bricks, burnt them with the coal supplied by the Project Administration and supplied the bricks and received the various amounts. The question arising for consideration has to be determined on a consideration of the terms and conditions of the contract and in the light of certain principles laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be sold only to the public if and when released for such purpose by the Project Administration. Any quantity of coal overdrawn shall be returned to the Project Administration and if they are not returned within three weeks, they shall be charged at the rate of Rs. 120 per metric ton. The petitioners shall not have the option to refuse to take delivery of any coal offered to them by the Project Administration and if the petitioners refuse to take the coal the contract itself could be terminated. The petitioners will have to make their own arrangements for the supply of water and also sand, clay, or ashes, if any, needed to be mixed with the earth so as to produce bricks of the specified quality. The tenderer's rates shall include supply of materials at the place stipulated in the schedule of quantities duly stacked and including all charges of transport, stacking, sales tax, excise duty or any other local and Government taxes. The rate at which the contract is accepted for supply is at Rs. 64 per thousand bricks. If the workmanship of the brick supplied is inferior, the rate shall be reduced according to the decision of the engineer-in-charge of the Project Administration. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any time after the conclusion of the agreement, the Project Administration shall for any reason whatsoever not require whole or any part of the supply, the accepting officer shall give notice in writing of the fact to the petitioners specifying the steps to be taken by the petitioners to complete or otherwise manufacture of the bricks in a semi-manufactured state and the extent to which the supplies or any part thereof may further be delivered by the petitioners. The petitioners shall have no claim to any compensation or otherwise howsoever on account of any profit or advantage which they might have derived from the execution of the supplies in full; but which they did not have in consequence of foreclosure of the contract. They shall be only entitled for a reasonable payment as decided by the accepting officer for any expenses sustained on account of labour and materials collected and structures erected but which could not be utilised on the supplies. These are the main terms of the contract. Though some of the clauses above-stated are peculiar to a contract of sale, many of the terms are usually found only in a works contract. The requirements as to carry on the work on the sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bricks manufactured and that the clauses relied on by the learned Assistant Government Pleader are part of the terms of the works contract itself. As we have already seen, even the inferior quality bricks were to be purchased at reduced rates, subject to the condition that the Project Administration is not bound to take those bricks. The petitioners were permitted to remove only such of those materials which did not conform to the specifications, subject to payment of a royalty of Rs. 5 per thousand bricks. In Commissioner of Sales Tax v. Purshottam Premji[1970] 26 S.T.C. 38 (S.C.). , the Supreme Court held that from the mere fact that the assessee was required to remove the rejected materials under a contract, similar to the one on hand, it could not be inferred that the assessee was the owner of the materials because that provision in the clause was intended not to benefit the assessee but the railways which entered into the contract with the assessee because those materials were useless for the railways. The learned Assistant Government Pleader also referred to the decision of the Supreme Court in Chandra Bhan Gosain v. State of Orissa[1963] 14 S.T.C. 766 (S.C.). The terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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